* Russia, China, Brazil favour currency debate
* Berlusconi says China "resisting" on climate
* Italy sees dialogue with Iran continuing
(Adds Berlusconi news conference and arrests)
By Stephen Brown
ROME, July 7 (Reuters) - China, Russia and Brazil will use this week's G8 summit in Italy to push their view that the world needs to think about a new global reserve currency as an alternative to the dollar, officials said on Tuesday.
As leaders of the Group of Eight rich nations and the major developing powers travelled to Italy for a three-day summit starting on Wednesday, it seemed unlikely the currency debate would get a specific mention in summit documents.
But both G8 member Russia and emerging power Brazil -- which like China and India is a member of the "G5" that joins the second day of the summit on Thursday -- echoed China's calls for the currency debate to be taken up by world leaders.
Top Kremlin economic aide Arkady Dvorkovich said China and Russia would "state their stance that the global currency system needs smooth evolutionary development".
Brazilian President Luiz Inacio "Lula" da Silva said he was keen to explore "the possibility of new trade relations not dependent on the dollar" and India has also said it is open to the debate.
But G8 members Germany, France and Canada played down talk of the summit including a detailed currency discussion. A source at President Nicolas Sarkozy's office said the G8 was "generally not the forum ... for discussing currency exchange rates".
German Finance Minister Peer Steinbrueck said on Monday the dollar was likely to remain the global reserve currency but the Chinese yuan and the euro would slowly gain in significance.
The debate is highly sensitive in financial markets, which are wary of risks to U.S. asset values. China and other nations promoting the debate take care to avoid undermining the dollar, which Lula said would be vital "for decades" to come.
The case of China, which has up to 70 percent of its $1.95 trillion in official currency reserves in the dollar, underlines the fact that the dollar is still the most important reserve currency.
But China believes over-reliance on the dollar has exacerbated the financial crisis and sees the International Monetary Fund's special drawing rights (SDRs), based on a basket of currencies, as a viable alternative for the future.
G8 URGED TO ACT ON POVERTY
Italy's keenness to avoid a repeat of the riots and police brutality that marred the 2001 G8 in Genoa meant security was tight around the earthquake-stricken mountain town of L'Aquila, where leaders will sleep in an austere police training school.
Police arrested 10 people including five French citizens in L'Aquila found with clubs and sticks in their vehicle. In Rome small groups of student protesters clashed with police.
"We want to demonstrate once again against what the G8 represents," said a student giving her name as Maria Teresa.
Pope Benedict issued a document to coincide with the G8, urging leaders to impose tough rules on the financial system.
In the encyclical, he called for "a true world political authority ... to manage the global economy" and avoid more "abuse" of the free market.
Summit host Silvio Berlusconi said G8 talks on Friday with nine African leaders and food agencies would see the launch of a $10-15 billion initiative on food security, to which the United States would pledge $3-4 billion.
PROGRESS ON CLIMATE, TRADE
The G8 talks open with discussion of the economic crisis. Prime Minister Berlusconi is eager to transmit optimism, though his credibility as host is undermined by a prostitution scandal, a poor record on aid and his reputation for diplomatic gaffes.
It did look as though the summit might produce a breakthrough on trade. A draft communique suggested the G8 and G5 would agree to conclude the stalled Doha round of trade talks in 2010. Launched in 2001 to help poor countries prosper through trade, they have stumbled on proposed tariff and subsidy cuts.
With an eye to December's U.N. climate change summit in Copenhagen agreeing a successor to the 1997 Kyoto pact, leaders will also try to narrow differences over cuts in greenhouse gas emissions and funding for low carbon technology.
The aim is to agree to limit the rise in global temperatures since pre-industrial times to 2 degrees Celsius (3.6 Fahrenheit) and strengthen last year's vague "vision" of halving global carbon emissions by 2050.
If also adopted at the 17-member Major Economies Forum talks chaired on Thursday by U.S. President Barack Obama, this would be progress as India and China have resisted the 2050 target.
But Berlusconi introduced a note of caution, saying Europe and Obama wanted to be in the "vanguard" on climate change but he had "encountered strong resistance" from Chinese President Hu Jintao at their meeting in Rome on Monday.
Berlusconi said Iran's post-election violence and nuclear programme would be on the agenda, some wanting sanctions and "others saying sanctions never obtained great results".
"Personally I think we will continue to have dialogue," the Italian leader told a news conference. (Reporting by Reuters bureaux across the world; writing by Stephen Brown; editing by Crispian Balmer and Tim Pearce)